thursday

S1: Under PFRS 3, the acquirer is the entity that obtains control of the acquiree. In a businesscombination effected primarily by transferring cash or other assets, or by incurring liabilities, theacquiree is usually the entity that transfers the cash or other assets, or incurs the liabilities.

S2: Under PFRS 3, the acquisition date should always be the closing date.

• True, false

• False, true

• false, false

• True, true

Under PFRS 3, which of the following statements is incorrect?

• The acquirer shall recognize the acquisition-date fair value of any contingent consideration as part of the consideration transferred in exchange for the acquiree. The acquirer shall classify the obligation to pay the contingent consideration as either liability or equity

• if the resulting amount in the computation of goodwill is "negative", the acquirer shall recognize a "gain on bargain purchase" as a contra asset account.

• The acquirer shall account for acquisition-related costs as expenses in the period in which the costs are incurred, except the costs of issuing debt and equity securities

• Under PFRS 3, the acquirer shall account for each business combination under acquisition method.

Which of the following statements is correct?

• The PFRS for SMEs does not address the accounting for business combinations

• An SME cannot recognize any goodwill

• the PFRS for SMEs requires the use of the purchase method in accounting for business combinations.

• Control is not an essential criterion in identifying business combination between SMEs.

The PFRS for SMEs differs from PFRS 3 in all of the following respects, except

• the measurement of the consideration transferred.

• the treatment of NCI in the computation of goodwill.

• the treatment of acquisition-related costs.

• the recognition criteria for contingent liabilities

S1: If the consideration transferred in a business combination is deferred, the consideration may be measured at present value.

S2: An intangible asset that is unrecorded by the acquiree may nevertheless be recognized by the acquirer in a business combination.

S3: The acquisition method shall be applied only to business combinations wherein the acquirer obtains control of the acquiree by transferring consideration to the latter

• True, true, false

• False, false, tru

• True, false, false

• False, false, false

• True, true, true

Provisional amounts may be used if accounting is incomplete by the end of the reporting period in which the business combination occurs. Provisional amounts are adjusted

• prospectively for information obtained during the measurement period.

• retrospectively for information obtained during the measurement period

• not adjusted for any information obtained during the measurement period

• PFRS 3 (revised) outlawed the use of provisional amounts.

Under PFRS 3, contrary to PAS 37, what is the recognition principle of contingent liability assumed in a business combination?

• The acquirer shall recognize as of the acquisition date a contingent liability assumed in a business combination if it is a present obligation that arises from past events and its fair value can be measured reliably even only reasonable possible

• The acquirer shall recognize a contingent liability assumed in a business combination at the acquisition date only if it’s probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

• The acquirer shall recognize a contingent liability assumed in a business combination at the acquisition date only if it is virtually certain that an outflow of resources embodying economic benefits will be required to settle the obligation.

• The acquirer shall recognize a contingent liability assumed in a business combination at the acquisition date only if it is remote that an outflow of resources embodying economic benefits will be required to settle the obligation.

Which of the following statements best describes the term "control"

• The mutual sharing of risks and benefits

• The holding of a significant proportion of the share capital in another entity

• The power to participate in the financial and operating policy decisions of an entity

• The power to govern the financial and operating policies of an entity so as to obtain benefits from the activities

The application of the acquisition method of accounting for a business combination requires all of the following, except

• Identifying the acquirer

• Determining the acquisition date

• Not recognizing gain from bargain purchase

• Recognizing and measuring the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree.

In different types of business combination, which of the following is not considered as an acquirer?

• The remaining or absorbing corporation in case of merger

• The absorbed corporation in case of consolidation

• The corporation that acquires more than 50% of the other corporation’s ordinary shares.

• The corporation that controls the acquiree